Cutting Mortgage Principals Won't Solve Debt Woes: FHFA

Law360, New York (January 24, 2012, 7:30 PM EST) -- Economists and officials might think cutting principals is a good way to help homeowners facing foreclosure, but such a move would cost taxpayers $100 billion and would not be especially effective, the government agency that runs mortgage giants Fannie Mae and Freddie Mac reported Monday.

With nearly 3 million of Fannie and Freddie’s 30 million mortgages underwater as of June 30, 2011, allowing homeowners to defer principal payments would be a cheaper and equally effective option for addressing the mortgage debt crisis, acting Federal Housing Finance...
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